Silver holds no charm for Indian buyers even at lower price

KOLKATA: Silver in India, the poor man's gold, is witnessing a reverse trend compared to the world market where a slump in silver prices has spurred demand.

In India, the demand for silver jewellery has dropped significantly and the investment demand for the metal has almost dried up despite the price falling to Rs 46,000 per kg. This may bring down the country's import of silver by 12% to 2,200 tonne this year from 2,500 tonne last year.

"Those who preferred silver jewellery have now shifted to costume jewellery and silver's demand in the home-used items have also seen a drastic fall," said Bachhraj Bamalwa, director of Nemichand Bamalwa & Sons and former chairman of All India Gem & Jewellery Trade Federation.

Investors who had invested in the white metal at a level of Rs 60,000-Rs 70,000 per kg are waiting to offload it in the market if prices go up. Two years ago, silver prices had shot up to Rs 75,000 per kg. The industrial demand of silver is also not bright in the domestic market as the growth of electronic industry, the major user of silver, has slowed down.

Ujjwal Zaveri, partner at DP Zaveri & Sons, a silver firm in Mumbai's Zaveri Bazar, said: "There is no demand for silver at all in the market. A price crash has spurred gold demand but in the case of silver it has not happened. People are thinking that the price of silver will further crash and so they are holding back." He admitted that there is no demand for items like silver dinner sets, fruit trays, wine sets, spoons and forks. There is hardly any demand in the silver coin category.

South India, a major market for silver, has also not recorded any growth. Silver is largely used for deities and utensils in south India. Chennai-based leading silver merchant TM Srinivasalu said, compared to gold, silver demand has fallen.

"Nowadays, people are not keen to keep silver deities at home for safety reasons. That is one thing which is affecting silver demand. There is also a rumour in the market that prices will further fall. So people are not buying."